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Debt and Structure Finance Department    projects financing in cooperation with International Financial Organizations1    ...
DISCLAIMER    This presentation has not been approved by the UK financial services authority. It shall not and does not co...
CONTENTS      1   Vnesheconombank      2   Cooperation with International Financial Organizations      3   Financing progr...
BRIEF INFORMATION       State Corporation Bank for Development and Foreign Economic Affairs or Vnesheconombank        (VE...
CREDIT HIGHLIGHTS    Strategic role for the Russian economy    •   Key focus on supporting industry and infrastructure pro...
VNESHECONOMBANK ACTIVITIES    Investment and Development    •   Lending to top priority industries which are of strategic ...
7
CONTENTS      1   Vnesheconombank      2   Cooperation with International Financial Organizations      3   Financing progr...
CURRENT WAYS OF COOPERATION       Recent efforts of VEB have been forwarded to deepening cooperation with International  ...
PERSPECTIVE PROJECTS AND VEB PARTICIPATION     FORM      According to VEB pipeline the following initiatives would be con...
CONTENTS       1   Vnesheconombank       2   Cooperation with International Financial Organizations       3   Financing pr...
BRIEF DESCRIPTION OF FINANCING PROGRAMS        VEB has already developed a few spheres of close cooperation with IFOs.   ...
CONTENTS       1   Vnesheconombank       2   Cooperation with International Financial Organizations       3   Financing pr...
TYPICAL CRITERIA AND TERMS OF FINANCING        Although terms of financing might differ depending on a certain project ch...
CONTENTS       1   Vnesheconombank       2   Cooperation with International Financial Organizations       3   Financing pr...
FINANCING PROCESS        A project examination process differs depending on IFO. Still common stages can be         disti...
Thank you !     9 Ak. Sakharov ave., Moscow, Russia           Cell: +7 (495) 721 94 74           Fax: +7 (495) 721 96 65  ...
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Reunión ALIDE-BICE: Nikolay Zdorovitskiy, Adviser to the Director of Structured and Debt Finance Department, Banco de Desarrollo de Rusia-Vnesheconombank

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Reunión de Negocios Internacionales entre la Banca de Desarrollo Latinoamericana (Buenos Aires, Argentina, jueves 11 y viernes 12 de octubre de 2012) Quinta Sesión: La experiencia de la banca internacional en la promoción de la integración regional y posibilidades / Instrumentos para operar con la banca de desarrollo latinoamericana

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Reunión ALIDE-BICE: Nikolay Zdorovitskiy, Adviser to the Director of Structured and Debt Finance Department, Banco de Desarrollo de Rusia-Vnesheconombank

  1. 1. Debt and Structure Finance Department projects financing in cooperation with International Financial Organizations1 October 2012
  2. 2. DISCLAIMER This presentation has not been approved by the UK financial services authority. It shall not and does not constitute either an offer to purchase or buy or a solicitation to purchase or buy or an offer to sell or exchange or a solicitation to sell or exchange any securities of Vnesheconombank (the "company") or any of its subsidiaries in the United States of America or in any other jurisdiction or an inducement to enter into investment activity. Except where otherwise indicated, the information provided in this presentation is based on matters as they exist as of the date stated or, if no date is stated, as of the date of preparation and not as of any future date, and the information and opinions contained herein are subject to change without notice. None of the company nor any of its subsidiaries accepts any obligation to update or otherwise revise any such information to reflect information that subsequently becomes available or circumstances existing or changes occurring after the date hereof. None of the company or any of its subsidiaries or any of their respective directors, officers, employees or agents shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation and any and all such liability is expressly disclaimed. persons who attend this presentation or view this presentation are required to make themselves aware of and adhere to any and all restrictions applicable to them. This presentation is not for publication, release or distribution in, nor does it constitute an offer of securities in the United States, Canada, Japan or Australia. Neither the presentation nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions (collectively, the “United States”) or distributed, directly or indirectly, in the United States or to any U.S. person as defined in Regulation S under the U.S. Securities Act of 1933 (the “Securities Act”), except that it may be transmitted to qualified institutional buyers, as defined in Rule 144a under the Securities Act, that are also qualified purchasers, as defined in section 2(a)(51) of the U.S. Investment Company Act of 1940, in reliance on the exemption from registration provided by Rule 144a under the Securities Act and (ii) to non- U.S. persons outside the United States who are not acting for the account or benefit of a U.S. person, in reliance on Regulation S under the Securities Act. This presentation is not a public offer of securities for sale in the United States. The securities proposed in the offering have not been and will not be registered under the Securities Act and may not be offered or sold in the United States or to U.S. persons absent registration or an exemption from registration under the Securities Act. Vnesheconombank does not intend to register any portion of the proposed offering under the applicable securities laws of the United States or conduct a public offering of any securities in the United States. Any failure to comply with these restrictions may constitute a violation of U.S. securities laws, as applicable. This presentation may only be attended by, and this presentation may only be viewed by, persons in member states of the European economic area who are qualified investors within the meaning of article 2(1)(e) of the Prospectus Directive (2003/7/ec) (“qualified investors”) and persons who (i) are outside the United Kingdom or (ii) are persons falling within articles 19(5) or 49(2)(a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons (together with qualified investors) being referred to as “relevant persons”). This presentation must not be acted on or relied on by persons who are not relevant persons and any investment or investment activity to which this presentation relates is available only to relevant persons and will be engaged in only with relevant persons. This presentation contains "forward-looking statements", which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could“ or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the companys control that could cause the actual results, performance or achievements of the company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares, financial risk management and the impact of general business and global economic conditions. Such forward-looking statements are based on numerous assumptions regarding the companys present and future business strategies and the environment in which the company will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made and the company accepts no obligation to update the forward-looking statements contained herein to reflect actual results, changes in assumptions, or changes in factors affecting these statements. Information contained in this presentation does not constitute an advertisement or offering of any securities of the company in Russia within the meaning of Russian securities laws and must not be passed on to third parties or otherwise be made publicly available in Russia. The information contained herein must be kept strictly confidential and may not be reproduced or redistributed, in whole or in part, in any format without the express written approval of the company. Any failure to comply with these restrictions may constitute a violation of U.S., the United Kingdom or Russian securities laws, as applicable. The distribution of this document in other jurisdictions may also be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, such restrictions. NO REPRESENTATION, WARRANTY OR UNDERTAKING, EXPRESS OR IMPLIED, IS MADE AS TO, AND NO RELIANCE SHOULD BE PLACED ON, THE FAIRNESS, ACCURACY, COMPLETENESS OR CORRECTNESS OF THE INFORMATION OR THE OPINIONS CONTAINED HEREIN. THIS PRESENTATION IS NOT TO BE RELIED UPON IN ANY MANNER AS LEGAL, TAX OR ANY OTHER ADVICE AND SHALL NOT BE USED IN SUBSTITUTION FOR THE EXERCISE OF INDEPENDENT JUDGMENT AND EACH PERSON MADE AWARE OF THE INFORMATION SET-FORTH HEREOF SHALL BE RESPONSIBLE FOR CONDUCTING ITS OWN INVESTIGATION AND ANALYSIS OF THE INFORMATION CONTAINED HEREIN. EXCEPT WHERE OTHERWISE INDICATED, THE INFORMATION PROVIDED IN THIS PRESENTATION IS BASED ON MATTERS AS THEY EXIST AS OF THE DATE STATED OR, IF NO DATE IS STATED, AS OF THE DATE OF PREPARATION AND NOT AS OF ANY FUTURE DATE, AND THE INFORMATION AND OPINIONS CONTAINED HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE. NONE OF THE STATE CORPORATION BANK FOR DEVELOPMENT AND FOREIGN ECONOMIC AFFAIRS (VNESHECONOMBANK) ( “VEB”) NOR ANY OF ITS SUBSIDIARIES ACCEPTS ANY OBLIGATION TO UPDATE OR OTHERWISE REVISE ANY SUCH INFORMATION TO REFLECT INFORMATION THAT SUBSEQUENTLY BECOMES AVAILABLE OR CIRCUMSTANCES EXISTING OR CHANGES OCCURRING AFTER THE DATE HEREOF. NONE OF VEB OR ANY OF ITS SUBSIDIARIES OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS SHALL HAVE ANY LIABILITY2 WHATSOEVER (IN NEGLIGENCE OR OTHERWISE) FOR ANY LOSS HOWSOEVER ARISING FROM ANY USE OF THIS PRESENTATION OR ITS CONTENTS OR OTHERWISE ARISING IN CONNECTION WITH THE PRESENTATION AND ANY AND ALL SUCH LIABILITY IS EXPRESSLY DISCLAIMED. THE INFORMATION CONTAINED HEREIN MUST BE KEPT STRICTLY CONFIDENTIAL AND MAY NOT BE REPRODUCED OR REDISTRIBUTED IN ANY FORMAT WITHOUT THE EXPRESS WRITTEN APPROVAL OF VEB.
  3. 3. CONTENTS 1 Vnesheconombank 2 Cooperation with International Financial Organizations 3 Financing programs 4 Typical criteria and terms of financing 5 Financing process3
  4. 4. BRIEF INFORMATION  State Corporation Bank for Development and Foreign Economic Affairs or Vnesheconombank (VEB) was established in 2007 through a transformation of Bank for Foreign Economic Affairs of the USSR.  The Bank is one of the key instruments for implementing the state economic policy aimed at removing infrastructure restrictions that impede economic growth, contributing to an increase in foreign investments in Russian economy, enhancing efficient utilization of natural resources, developing high-tech industries, unleashing innovative and industrial potential of enterprises and ensuring of exports of industrial goods and services.  In line with Memorandum on Financial Policies, Vnesheconombank delivers investment projects aimed at: - Removing infrastructure impediments to economic growth; - Fostering innovations; - Enhancing the efficiency of natural resources utilization; - Protecting the environment; - Increasing energy efficiency; - Developing SMEs; - Supporting exports of agricultural and industrial production and services.4  The Bank is noted for an impeccable financial reputation. The long-term credit ratings are at par with the sovereign rating of the Russian Federation.
  5. 5. CREDIT HIGHLIGHTS Strategic role for the Russian economy • Key focus on supporting industry and infrastructure projects of strategic importance to the Russian economy • Support for Russian industrial exports • Agent to the Russian Government in managing State financial assets, debt and the State Pension Fund • Support of the Russian economy during 2008-2009 • SME Support including through subsidiary bank “SME Bank” Closest proxy to the Russian Sovereign • State Corporation «Bank for Development and Foreign Economic Affairs (Vnesheconombank)»(“VEB”) • “State corporation”status under Russian legislation • 100% owned by Russian Federation • Senior government representation on the Supervisory Board chaired by Russia’s Prime Minister • International credit ratings at par with the Russian sovereign • Equity contributions directly from the Federal Budget Strong credit fundamentals • One of the best capitalised development banks in the world -Capital adequacy ratio of 20.1% as of 30.06.2011 • High quality of the loan portfolio with prime exposure to blue-chip Russian borrowers5 • Strong profitability - Net Interest Margin of 3.3% in 1H2011 • Low leverage - Debt-to-Total Assets* of 9.7% and Debt-to-Total Equity of 41.5% as of 30.06.2011
  6. 6. VNESHECONOMBANK ACTIVITIES Investment and Development • Lending to top priority industries which are of strategic importance in Russia • Support for national infrastructure projects • Subordinated loans to Russian banks (total outstanding RUB 348 bnas at 30.06.2011) • SME support program • Attracting direct investments in key sectors of Russian economy using the mechanism of co-investment through equity funds -Russian Direct Investments Fund (100 % VEB subsidiary), MRIF, etc. Export Support • Export Credit Finance, Insurance and Guarantees (heavy machinery, high tech, and others) • Co-operation agreements with all major Export Credit Agencies and Export-Import Banks • First Russian ECA established –VEB subsidiary with RUB30bn in charter capital. All liabilities of the company guaranteed by the State6 Agent of the State • Government Debt Management
  7. 7. 7
  8. 8. CONTENTS 1 Vnesheconombank 2 Cooperation with International Financial Organizations 3 Financing programs 4 Typical criteria and terms of financing 5 Financing process8
  9. 9. CURRENT WAYS OF COOPERATION  Recent efforts of VEB have been forwarded to deepening cooperation with International Financing Organizations (IFOs). Such cooperation would grant Russian enterprises an access to long-term financial resources with an affordable cost of capital.  VEB and IFOs developed a number of mechanisms to provide financial support. Total potential capacity of all programs has totaled $4 650 mln as of June, 2012.  Sphere of VEB and IFOs cooperation is defined as but not limited to: - Energy Efficiency; - Small- and Medium-sized Enterprises (SMEs); - Pharmaceutical and Environmental Protection; - Transport and Logistics Development; - Infrastructure projects development. IFO Ways of cooperation Commitment ($ mln) European Bank of Reconstruction and Loan, co-financing, 500 VEB + 1 000 EBRD Development guarantee European Investment Bank Loan, co-financing 500 VEB + 600 EIB World Bank Loan 800 VEB + 800 WB Nordic Environment Finance Corporation Loan, co-financing in progress9 International Finance Corporation Investment fund 250 VEB + 250 IFC + 50 Minfin
  10. 10. PERSPECTIVE PROJECTS AND VEB PARTICIPATION FORM  According to VEB pipeline the following initiatives would be considered for an implementation with IFOs: - Venture fund aimed for IT and technology investment; - Infrastructure projects investment fund; - Program aimed to finance actions increasing resources utilization rate; - Co-financing program with IFOs based on PPP principles.  Perspective projects are being discussed with IFOs at the moment.  VEB and IFO consider participation in projects with different mechanisms including project financing, direct investments in shareholders capital, guarantee and etc.  The exact type of participation depends on a project.10
  11. 11. CONTENTS 1 Vnesheconombank 2 Cooperation with International Financial Organizations 3 Financing programs 4 Typical criteria and terms of financing 5 Financing process11
  12. 12. BRIEF DESCRIPTION OF FINANCING PROGRAMS  VEB has already developed a few spheres of close cooperation with IFOs. Sphere of activity Brief description Energy Efficiency Energy saving and renewables, clean-coal technologies, utilization of associated gas and methane, carbon capture and storage, energy efficient district heating and energy saving measures in buildings, energy efficiency in energy generation, transmission and distribution Small- and Medium-sized Support of innovative SME initiatives, including business incubators, Enterprises (SMEs) technology parks, business technology centres. Support of financial services to SMEs (venture funds, credits, micro credits and etc.) Pharmaceutical Commercialization of innovations in the sector Environmental Protection Decreasing a contamination rate and compensation of environmental damage caused previously Transport and Logistics Facilitation of transport integration under the Northern Dimension Partnership Development for Transport and Logistics and the Central Axis Partnership, cooperation in sea transport and multimodal developments and connections, introduction of intelligent transport systems and road safety improvement, development of a high-speed Russia-EU rail network Infrastructure projects Road and parking construction, implementation of traffic management development systems, airport development, rehabilitation / reconstruction of wastewater treatment plans at any level (including enterprises), improvements in metering and commercial management of housing12
  13. 13. CONTENTS 1 Vnesheconombank 2 Cooperation with International Financial Organizations 3 Financing programs 4 Typical criteria and terms of financing 5 Financing process13
  14. 14. TYPICAL CRITERIA AND TERMS OF FINANCING  Although terms of financing might differ depending on a certain project characteristics an indicative criteria list can be developed. Indicator Description Investment budget $10-200 mln (can consist more than 1 project) Internal Rate of Return and IRR should be at least 12%, PP more than 5 years Payback Period Loan Senior loan secured with collateral, subordinated loan, convertible loan Equity (LTC ratio) Owners should invest at least 15% of Investment budget Loan maturity 3-22 years Interest rate Floating or fixed, might be lower or in line with a market level Grace period Up to 30% of loan maturity (for the loan body) Currency Usd, eur or rub Collateral Loan should be secured with collateral Other Financial reporting and Purchase policy should meet IFOs’ requirements14
  15. 15. CONTENTS 1 Vnesheconombank 2 Cooperation with International Financial Organizations 3 Financing programs 4 Typical criteria and terms of financing 5 Financing process15
  16. 16. FINANCING PROCESS  A project examination process differs depending on IFO. Still common stages can be distinguished. Step Description Information needed Concept review Brief review of a project concept Brief description of a project (sphere, location, budget, timeline) Indicative terms VEB and IFO issue non-binding indicative The project presentation terms of financing Preliminary project The project is being checked to meet IFO Application form examination and VEB basic requirements Technical expertise The project is being inspected with a team Technical documentation, approvals of technical experts and consultants and etc. Financial and legal Due The project is being inspected with Legal and financial documentation, Diligence lawyers and financial experts financial models, financial statements and etc. Final project The project is being presented at the n/a examination internal Investment Committee Final term sheet VEB and IFO issue final tem sheet n/a Project approval The project is being approved internally n/a Signing of an agreement VEB and IFO sign an agreement n/a16  The project examination process may take up to 6 months.
  17. 17. Thank you ! 9 Ak. Sakharov ave., Moscow, Russia Cell: +7 (495) 721 94 74 Fax: +7 (495) 721 96 65 www.veb.ru17

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